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Thursday, 14 June 1984
Page: 3018

Senator JONES —Has the attention of the Minister representing the Treasurer been drawn to the Australian Bureau of Statistics recently published figures that show a strong upsurge in lending by banks on home loans for the purchase and construction of new dwellings? Do these statistics show that bank lending for housing reached a record $540m in April, an increase of 2.6 per cent on the March figure of $527m? Are home loans, totalling $2,035m in the first four months of 1984, up 34.6 per cent on those for the same period in 1983? Will the increase in home loans continue? What effects will this lending have on the building industry, other trades in this area and the economy generally?

Senator WALSH —Without doubt the enormous increase in construction activity, particularly in residential building, has made a major contribution to the very high rate of economic growth that will be recorded this financial year, a rate of growth now expected to be in June this year about 10 per cent above what it was in June last year. The growth rate in even the non-farm sector is expected to be 8 per cent, or thereabouts, which is the highest rate of growth that has been recorded since certainly the 1960s and possible even further back. It is very pleasing to the Government, of course, that those growth rates have been achieved and that the housing industry has made a major contribution to them.

I think it is worthy of particular note that, according to the most recent figures, housing investment for the March quarter is some 33 per cent-that is, one third higher than it was in the March quarter of the previous year. This demonstrates that the housing policies put in place by this Government have been far more effective than the housing policies of the previous Government. The policy of this Government has aimed public financial assistance at those marginal home buyers whereas the previous Government's approach was to spread, by way of tax expenditures-thereby hiding the real cost as well, of course-the largesse across the whole spectrum. Therefore any given amount of cost to the public, whether hidden as a tax expenditure or overt as a Budget appropriation, would have been less effective under the previous Government's inept policy than it has been under this Government's policy.

Even more encouraging is the fact that home loan approvals for May this year are some 70 per cent in round figures higher than they were at the trough level of home loan approvals of March 1982. The stimulus to building activity, of course, has been assisted not only by the better perceptions of the future of the economy that have been generated since this Government has been in power and the specific assistance aimed at marginal home purchasers, but also by the significant fall in interest rates which has occurred in the last 12 months- something over one per cent on average for housing loans.

The rate of activity now suggests that the Government's target for dwelling commencements, which was set a year ago at 130,000 to 135,000, will be exceeded in the first half of 1984. The economic stimulus of that will not be confined to the building industry; it will spill over to building supplies industries because the building industry has a fairly large multiplier effect on economic activity in general and therefore will generate substantial employment outside the building industry as well as very substantial employment inside it.